Fourth Quarter Highlights:
Full Year Highlights:
Fiscal 2020 Outlook:
( (1)Refer to “Definitions of Non-GAAP Financial Measures” and the tables attached at the end of this press release for reconciliation of Non-GAAP (“Adjusted” and “Comparable”) results to applicable GAAP results.)
CARLE PLACE, N.Y. - (BUSINESS WIRE) - 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), a leading provider of gifts designed to help customers express, connect and celebrate, today reported results for its Fiscal 2019 fourth quarter and full year ended June 30, 2019. Chris McCann, CEO, 1-800-FLOWERS.COM, Inc., said, “We entered fiscal 2019 with a plan to accelerate our revenue growth rate by investing behind our lead Harry & David and 1-800-Flowers.com brands and we are very pleased to have exceeded our growth targets, with total revenues increasing more than eight percent driven by strong growth across all three of our business segments. In terms of our bottom-line results, year-over-year contribution margins exceeded our plans in all three business segments with solid growth in total EBITDA, EPS and Free Cash Flow driven primarily by strong performance in our Gourmet Foods and Gift Baskets and BloomNet segments. These results reflect our intense focus on execution and innovation – in our digital marketing programs, in merchandising programs that emphasize new product development and, in our initiatives to constantly improve our business platform to enhance our operating leverage.”
Regarding fiscal fourth quarter results, McCann said the Company saw a continuation of the momentum experienced throughout the year, with total revenues for the period up nearly 13 percent, driven by strong growth in all three of its business segments. “During the quarter, revenues in our Gourmet Foods and Gift Baskets segment increased more than 20 percent, reflecting the benefit of the Easter shift, as well as a continuation of strong growth in everyday gifting. In Consumer Floral, we further extended market-leadership of the 1-800-Flowers.com brand, with segment revenues up more than 10 percent, driven by solid everyday gifting demand as well as a strong Mother’s Day holiday combined with the benefit of the Easter shift. We also increased market share for BloomNet, with revenue growth of more than nine percent for the quarter driven by continued increases in order volumes, as well as strong growth in digital directory advertising.
“As we enter fiscal 2020, the momentum we have achieved in these areas will help us drive strong revenue growth as well as enhanced bottom-line results. In addition, we are excited to kick off the fiscal year with our acquisition of Shari’s Berries, a category-leader that we see as an excellent fit with our all-star family of brands.
“Throughout the year,” McCann added, “we will continue to invest in strategic marketing and merchandising programs across our brands, as well as in innovations that enhance our number one product – customer experience. We also remain intensely focused on growing our customer base and expanding the platform we are building to further our vision to inspire more human expression, connection and celebration together with our mission to deliver smiles.”
Fiscal Fourth Quarter Results
Total reported revenue for the fiscal fourth quarter increased 12.8 percent to $259.4 million, compared with $229.9 million in the prior year period. This reflected strong growth across all three of the Company’s business segments and included the benefit of the shift of the Easter holiday into the quarter, compared with the prior year when the holiday fell in the Company’s fiscal third quarter. For the second half of the fiscal year, which combines the Company’s third and fourth quarters, eliminating the impact of the timing of the Easter holiday, total revenues increased 8.4 percent.
Gross profit margin for the quarter increased 10 basis points to 40.6 percent, compared with 40.5 percent in the prior year period. Operating expense as a percent of total sales improved 20 basis points to 45.2 percent, compared with 45.4 percent in the prior year period.
Adjusted EBITDA(1) loss for the quarter was $2.7 million, compared with an Adjusted EBITDA(1) loss of $1.8 million in the prior year period. Net loss was $8.3 million, or ($0.13) per share, compared with a net loss of $8.2 million, or ($0.13) per share in the prior year period. On a comparable basis(1), fiscal 2018 net loss for the quarter was $7.6 million, or ($0.12) per share.
Fiscal 2019 Full Year Results
Total revenues for the full fiscal year increased 8.4 percent to $1.25 billion, compared with $1.15 billion in the prior year, reflecting accelerated growth across all three of the Company’s business segments. Gross profit margin for the year was 42.1 percent, compared with 42.5 percent in the prior year. Operating expense as a percent of total revenues was 38.5 percent, compared with 38.9 percent in the prior year. Adjusted EBITDA was $82.1 million, compared with $78.9 million in the prior year. This includes the impact of the Company’s increased investments in strategic marketing and merchandising programs to take advantage of market conditions and accelerate revenue growth and the restoration of a full bonus payout in fiscal 2019, compared with a minimal bonus payout in fiscal 2018.
Net income was $34.8 million, or $0.52 per share, compared with $40.8 million, or $0.61 per share in the prior year. On a comparable basis(1), fiscal 2018 net income was $29.3 million, or $0.44 per share. Free cash flow for the year was $45.0 million.
Customer Metrics
During the fiscal fourth quarter, the Company attracted 952,000 new customers. Approximately 2.2 million customers placed orders during the quarter, of whom 57.1 percent were repeat customers. For the year, the Company attracted 3.1 million new customers, reflecting the effectiveness of the Company’s investments in strategic marketing and merchandising programs designed to grow its customer files. Approximately 7.2 million customers placed orders during the year, of whom 57.3 percent were repeat customers.
Segment Results
The Company provides selected financial results for its Gourmet Foods and Gift Baskets, Consumer Floral and BloomNet business segments in the tables attached to this release and as follows:
Company Guidance
For fiscal 2020, the Company’s guidance reflects its plans to continue to invest in strategic marketing and merchandising programs to take advantage of market conditions and build on the revenue growth momentum it is seeing across all three of its business segments and includes the anticipated contributions related to the acquisition of the Shari’s Berries brand. Based on these factors, the Company is providing guidance for fiscal 2020 as follows:
Total consolidated revenue growth of 8-to-9 percent, compared with the prior year, including approximately 6-to-7 percent organic revenue growth combined with anticipated contributions from the acquisition of the Shari’s Berries brand;
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, Non-Qualified Plan Investment appreciation/depreciation, and for certain items affecting period-to-period comparability. See Selected Financial Information for details on how EBITDA and Adjusted EBITDA were calculated for each period presented. The Company presents EBITDA and Adjusted EBITDA because it considers such information meaningful supplemental measures of its performance and believes such information is frequently used by the investment community in the evaluation of similarly situated companies. The Company uses EBITDA and Adjusted EBITDA as factors used to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company's credit agreement uses EBITDA and Adjusted EBITDA to determine its interest rate and to measure compliance with certain covenants. EBITDA and Adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of the limitations are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and EBITDA does not reflect any cash requirements for such capital expenditures. EBITDA and Adjusted EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company's performance.
Segment Contribution Margin
We define Segment Contribution Margin as earnings before interest, taxes, depreciation and amortization, before the allocation of corporate overhead expenses. See Selected Financial Information for details on how Segment Contribution Margin was calculated for each period presented. When viewed together with our GAAP results, we believe Segment Contribution Margin provides management and users of the financial statements meaningful information about the performance of our business segments. Segment Contribution Margin is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of the Segment Contribution Margin is that it is an incomplete measure of profitability as it does not include all operating expenses or non-operating income and expenses. Management compensates for these limitations when using this measure by looking at other GAAP measures, such as Operating Income and Net Income.
Adjusted and/or Comparable Net Income/(Loss) and Adjusted and/or Comparable Net Income/ (Loss) Per Common Share (EPS)
We define Adjusted and/or Comparable Net Income/ (Loss) and Adjusted and/or Comparable Net Income/ (Loss) Per Common Share (EPS) as Net Income and Net Income Per Common Share (EPS) adjusted for certain items affecting period-to-period comparability. See Selected Financial Information below for details on how Adjusted and/or Comparable Net Income/(Loss) and Adjusted and/or Comparable Net Income/(Loss) Per Common Share (EPS) were calculated for each period presented. We believe that Adjusted and/or Comparable Net Income/(Loss) and Adjusted and/or Comparable Net Income/(Loss) Per Common Share (EPS) are meaningful measures because they increase the comparability of period to period results. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP Net Income and Net Income Per Common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.
Free Cash Flow
We define Free Cash Flow as net cash provided by operating activities less capital expenditures. The Company considers Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company’s business, make strategic acquisitions, strengthen the balance sheet and repurchase stock or retire debt. Free Cash Flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies. Since Free Cash Flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company's cash balance for the period.
1-800-FLOWERS.COM, Inc. is a leading provider of gifts designed to help customers express, connect and celebrate. The Company’s Celebrations Ecosystem features our all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry & David®, Shari’s Berries®, FruitBouquets.com®, Moose Munch®, The Popcorn Factory®, Wolferman’s®, Personalization Universe®, Simply Chocolate®, and Goodsey®. We also offer top-quality steaks and chops from Stock Yards®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral wire service providing a broad-range of products and services designed to help professional florists grow their businesses profitably; Napco SM, a resource for floral gifts and seasonal décor; and DesignPac Gifts, LLC, a manufacturer of gift baskets and towers. 1-800-FLOWERS.COM, Inc. received the Gold award in the “Mobile Payments and Commerce” category at the Mobile Marketing Association 2018 Global Smarties Awards. In addition, Harry & David was named to the Internet Retailer 2019 “The Hot 100” list. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS.
Special Note Regarding Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified using statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “forecast,” “likely,” “will,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including, but not limited to, statements regarding the Company’s expectations for: the success of its planned investments in strategic or targeted investments in marketing and merchandising programs; its ability to achieve its guidance for full fiscal-year 2020 revenue growth rate in a range of 6-to-7 percent; its ability to achieve full fiscal-year 2020 Adjusted EBITDA and EPS growth in a range of 8-to-10 percent; its ability to generate Free Cash Flow for the full fiscal 2020 year of approximately $45 million; its ability to leverage its operating platform and reduce operating expense ratio; its ability to cost effectively acquire and retain customers; its ability to grow its customer files; the outcome of contingencies, including legal proceedings in the normal course of business; its ability to efficiently integrate and profitably grow the Shari’s Berries brand; its ability to compete against existing and new competitors; its ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments and general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company’s products. Reconciliations for forward looking figures would require unreasonable efforts at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including for example those related to compensation, tax items, amortization or others that may arise during the year, and the Company's management believes such reconciliation would imply a degree of precision that would be confusing or misleading to investors. The lack of such reconciling information should be considered when assessing the impact of such disclosures. The Company undertakes no obligation to publicly update any of the forward-looking statements, whether because of new information, future events or otherwise, made in this release or in any of its SEC filings except as may be otherwise stated by the Company. For a more detailed description of these and other risk factors, please refer to the Company’s SEC filings, including the Company’s Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q. Consequently, you should not consider any such list to be a complete set of all potential risks and uncertainties.
Conference Call
The Company will conduct a conference call to discuss the above details and attached financial results today, Thursday, August 22, 2019, at 11:00 a.m. (EDT). The call will also be available via live webcast which can be accessed from the Investor Relations section of the 1-800-FLOWERS.COM, Inc. website at www.1800flowersinc.com. A recording of the call will be posted on the Investor Relations section of the Company’s website within two hours of the call’s completion. A telephonic replay of the call can be accessed for one week beginning at 2:00 p.m. (EDT) on the day of the call at: 1-888-203-1112 or at: (719) 457-0820; enter conference ID #: 5096868.
Note: The attached tables are an integral part of this press release without which the information presented in this press release should be considered incomplete.
FLWS-CP
FLWS-SB
Joseph D. Pititto
Investor Relations
(516) 237-6131
E-mail: invest@1800flowers.com
Kathleen Waugh
Media Relations
(516) 237-6028
kwaugh@1800flowers.com
View source version on businesswire.com: https://www.businesswire.com/news/home/20190822005124/en/
Source: 1-800-FLOWERS.COM, Inc.